Property Market 2016

Cuddlesworth

The_Conductor wrote: »

You're looking at the figures over a 10 year period- if you instead look at it monthly basis- over the past year- what Croc is suggesting isn't a million miles away from what anyone would surmise.

Of course you'll have massive swings after the mayhem we've had in the Irish economy- the fact of the matter though is since last September- when the Central Bank rules kicked in fully- the situation has broadly stabilised.

I think if your building a 5 year development, looking at 10 or 20 years worth of statistics is a good idea. 10%-20% upward swings are as bad as downward swings.

ckblackrock

The_Conductor wrote: »

If you want to look at the longer term- go all the way back to the 70s and early 80s. Vicious swings are not a new phenomenon.

My point was the implementation of the Central Bank rules has resulted in prices stagnating by and large- its also resulted in the volume of property hitting the market, and that on the market- falling off a cliff- however, thats for another discussion.

We have, probably for the first time- measures in place- which went against the wishes of our politican classes and their short term opportunism- to try and smooth out the wilder excesses of our property markets. They are only imposing what would be seen anywhere else- as prudent lending obligations on our lending institutions- as they are seen as incapable of prudence in their own rights (and sure why bother being prudent- when the government will bail them out if they screw up- and not for the first time for some two of them..........)

The big issue now- is lack of supply- and a side effect of the Central Bank's measures- is that this constraint has been exacerbated- which wasn't highlighted as a potential side effect of the measures.

We need supply to hit the market- consistent supply- in locations where people want to live- and this simple *need* has not been addressed by anyone at all thus far.

Once people realise that the Central Bank is not going to back down under political pressure, developers, land bank hoarders and private individuals may get real about prices. For people trying to get on the property ladder in Dublin, which would you prefer: to have to find 10% deposit on a 350k property and repay a mortgage of 315k, or a 5% deposit on a property which has shot up to 400k and repayments on a mortgage of 380k. Central bank rules can only be good for home buyers in the long term, or until the government introduces a tax on development land to prevent land speculation and hoarding - and how likely is that.

Rew

Speaking of which, delighted to see more of this:

http://www.irishtimes.com/business/economy/central-bank-says-mortgage-lending-rules-are-here-to-stay-1.2595565

The Central Bank has again robustly defended its restrictive mortgage lending rules, saying they are “permanent”.
...
Mr Fagan warned against people equating a review with a change in the rules.
“We shouldn’t think of a change taking place,” he said, adding that the rules may not be changed at all or may be tightened.

Villa05

The_Conductor wrote:

We need supply to hit the market- consistent supply- in locations where people want to live- and this simple *need* has not been addressed by anyone at all thus far.

The solution is so simple when you think about it and it's for the state to take on the role of building both social and affordable and for the private market.

They are the largest property owner in the world through NAMA, control supply of zoned land. They take 40% of the price of a house through various taxes and levies and can access 100 year finance at 2.3%. Measures would reduce dole queues significantly and can eliminate sub contracting which drives up costs. Drive down costs through economies of scale

Win win for everyone. Could, if worked correctly be a significant revenue generator fo the state.

What are the forces that prevent this from happening or is there something obvious that I'm missing that would prevent the state from doing this

If the market can't do it or is reluctant to, then we need to do it ourselves

OfflerCrocGod

The last twenty years of price data is probably less useful than the last year. We have only had the macro prudential CB rules in place for the last year and it's clear that even with tremendous pressure they are keeping prices stable.

tea_addict

dubrov wrote: »

I can't see why you think the market is stable.

Here are the CSO stats (% change) in Dublin for the last 10 years
2006 18.2
2007 5.5
2008 -9.2
2009 -24.1
2010 -14.5
2011 -15.1
2012 -12.2
2013 8.4
2014 21
2015 10.2

i neither know or care how they compile those statistics but the market in dublin rose in 2012 or at least remained flat , no way in hell did it drop by 12%

johnp001

Villa05 wrote: »

The solution is so simple when you think about it and it's for the state to take on the role of building both social and affordable and for the private market.

They are the largest property owner in the world through NAMA, control supply of zoned land. They take 40% of the price of a house through various taxes and levies and can access 100 year finance at 2.3%. Measures would reduce dole queues significantly and can eliminate sub contracting which drives up costs. Drive down costs through economies of scale

Win win for everyone. Could, if worked correctly be a significant revenue generator fo the state.

What are the forces that prevent this from happening or is there something obvious that I'm missing that would prevent the state from doing this

If the market can't do it or is reluctant to, then we need to do it ourselves

The forces preventing this are that the government set up NAMA with the direct intention of artificially inflating house prices by controlling the supply of zoned land. NAMA pays developers not to build and it is in the banks' interests and the developers' interests not to build too because this upholds the price of building land which was inflated vastly in the property boom as it was the indispensable raw material that was needed in order to generate vast profits by selling overpriced houses.
If this land were actually built on and the houses on it sold for non boom-time prices the developers would crystalise the losses made by buying the land at boom-time prices. The value of the land as a security held by the bank would fall and from the government's point of view insolvent banks and reduced land values are both unpalatable politically.
Also, house prices are barely sustained by constant government intervention to inflate them. It is clearly in the governments interest to continue to constrict housing supply which is why the only measures that they seem to be considering would do nothing to address the actual problem. Just more measures like VAT/levy reduction or Help To Buy schemes that do nothing to improve supply and everything to uphold prices and/or margins.
NAMA controls significant amounts of the available building land, the solution to the housing crisis is in the governments hands but they can't/won't use it as to do so would allow house values to drop which is a vote loser. Far more politically expedient to allow rampant homelessness and rent profiteering until it tears the economy down and the IMF come in again to take the blame as the bad guys.

Goat Paddock

tea_addict wrote: »

i neither know or care how they compile those statistics but the market in dublin rose in 2012 or at least remained flat , no way in hell did it drop by 12%

Interesting that Irish times state a loss of 4.5% nationally for 2012. Not bothered doing any more research on my phone but perhaps you can tea addict.

http://www.irishtimes.com/news/consumer/dublin-house-prices-surge-15-7-in-2013-official-figures-show-1.1665471

tea_addict

there would have been a drop nationally but dublin bottomed at least a year ahead of even cork or galway , let alone the rest of the country , limerick for example only bottomed in mid 2014

i was active in the dublin property market in 2012 , there was a marked difference from spring 2012 to late summer and autumn of that year , i do not sell property for a living BTW

tea_addict

well that irish times article from 2013 proved pretty off the mark , reference to an s + p report which predicted the market would drop again in 2014 and 2015

these reports are often funny , some even believe that the real bottom in the dublin market was between when the IMF arrived in late 2010 and the new goverment took office in early 2011

this was certainly the view of the big guns in that docu which david mc williams made about eighteen months ago , he spoke to the comer brothers from galway who are billionaire investors in property and have been at it since early seventies , the comer chap claimed that after the IMF arrived , they set about buying up whatever they could ( im talking entire apartment blocks etc ) before ( in their words ) the big american funds came in , this would entirely contradict the official reports as to when the market bottomed

then again the likes of the comers and the vulture funds operated in an insiders market which was unavailable perhaps to the general public

Bob24

tea_addict wrote: »

there would have been a drop nationally but dublin bottomed at least a year ahead of even cork or galway , let alone the rest of the country , limerick for example only bottomed in mid 2014

i was active in the dublin property market in 2012 , there was a marked difference from spring 2012 to late summer and autumn of that year , i do not sell property for a living BTW

The CSO figures rely on finalised transactions. A good number of the higher bids you encountered in the autumn of 2012 would only have resulted in actual transaction being finalised in early 2013.

Bob24

ckblackrock wrote: »

Once people realise that the Central Bank is not going to back down under political pressure, developers, land bank hoarders and private individuals may get real about prices. For people trying to get on the property ladder in Dublin, which would you prefer: to have to find 10% deposit on a 350k property and repay a mortgage of 315k, or a 5% deposit on a property which has shot up to 400k and repayments on a mortgage of 380k. Central bank rules can only be good for home buyers in the long term, or until the government introduces a tax on development land to prevent land speculation and hoarding - and how likely is that.

Absolutely agree with your logic, but I still have some doubts about the bit I highlighted:
- while the CBI has indeed sent a clear message saying the measures are there to stay (which I thing is great to hear), I don't see how they could resist if they were getting very strong political pressure AND public opinion was turning against them (not saying it will happen but it is not an option I would completely rule out as some interest groups are clearly working with the media to make it happen)
- it could take quite a long time for people to accept that the CBI won't back-off, and unexpected things could happen during that time

Piriz

Bob24 wrote: »

Absolutely agree with your logic, but I still have some doubts about the bit I highlighted:
- while the CBI has indeed sent a clear message saying the measures are there to stay (which I thing is great to hear), I don't see how they could resist if they were getting very strong political pressure AND public opinion was turning against them (not saying it will happen but it is not an option I would completely rule out as some interest groups are clearly working with the media to make it happen)
- it could take quite a long time for people to accept that the CBI won't back-off, and unexpected things could happen during that time

The Central Bank of Ireland is answerable to the European Central Bank to the best of my understanding. Political pressure and public opinion don't really feature in their terms of reference on this I would imagine. The CB / Financial Regulator took its eye off the ball and is partially responsible for what happened up to the crash. I'm hopeful they will not take their eye off the ball again.

Villa05

Bob24 wrote:

Absolutely agree with your logic, but I still have some doubts about the bit I highlighted: - while the CBI has indeed sent a clear message saying the measures are there to stay (which I thing is great to hear), I don't see how they could resist if they were getting very strong political pressure AND public opinion was turning against them (not saying it will happen but it is not an option I would completely rule out as some interest groups are clearly working with the media to make it happen) - it could take quite a long time for people to accept that the CBI won't back-off, and unexpected things could happen during that time

While I have the same concerns as you, I believe the Central Bank is answerable to the ecb and I believe the German administration are keeping a close eye on what's happening here. So irish politicians can crawl back into the hole they came out of when it comes to changing the CB rules on mortgages

Villa05

johnp001 wrote: »

The forces preventing this are that the government set up NAMA with the direct intention of artificially inflating house prices by controlling the supply of zoned land. NAMA pays developers not to build and it is in the banks' interests and the developers' interests not to build too because this upholds the price of building land which was inflated vastly in the property boom as it was the indispensable raw material that was needed in order to generate vast profits by selling overpriced houses.
If this land were actually built on and the houses on it sold for non boom-time prices the developers would crystalise the losses made by buying the land at boom-time prices. The value of the land as a security held by the bank would fall and from the government's point of view insolvent banks and reduced land values are both unpalatable politically.
Also, house prices are barely sustained by constant government intervention to inflate them. It is clearly in the governments interest to continue to constrict housing supply which is why the only measures that they seem to be considering would do nothing to address the actual problem. Just more measures like VAT/levy reduction or Help To Buy schemes that do nothing to improve supply and everything to uphold prices and/or margins.
NAMA controls significant amounts of the available building land, the solution to the housing crisis is in the governments hands but they can't/won't use it as to do so would allow house values to drop which is a vote loser. Far more politically expedient to allow rampant homelessness and rent profiteering until it tears the economy down and the IMF come in again to take the blame as the bad guys.

Absolutely, Alll measures are for the benefit of the usual suspects that were most culpable for the crash. Saving these people is more important than measures to help homeless children. The country is being run for sectional interest rather than for the greater good of the country and its people.

It was said a number of times during the crisis that the only thing worse than the banks failing would be the banks surviving

Villa05

Words of "wisdom" from Government Quango on housing

He said units are needed for smaller households and the rental market. And he warned that we must not build the "wrong" type of house to cater for a market which no longer exists: "The nightmare situation is to find ourselves like Berlin or Madrid, where the entire sector built houses which didn't sell," he said.

Oh God forbid

Meanwhile NAMA is selling off prime resedential sites around our cities for Vulture funds Land Savings Deposit schemes. Could there have been clauses in these contracts that buyers needed to build within a certain time frame - No Chance. Hoarde and profit and let someone else pay the bill

Villa05

Alan Kellys excuse "cant do anything because of the Constituion" shown up for the bullsh1t excuse it is by Edmund Honohan (Master of the High Court)

The Constitution in effect provides that the State may expropriate private property if the Oireachtas decides that to do so is for the "common good". Road widening is a good example.............

Cue now the lawyers' alternative analysis: that the Constitution enshrines marketplace rules; that the Supreme Court will determine what is the Common Good. Publish the Attorney General's advice to the Government and have a fully informed debate.



But given that the Supreme Court has already decided, in 2000, that the provision of affordable housing is an objective which is "socially just and required by the common good", what we do about it now is a political decision, not a legal one.

The Constitution cannot be used as cover for political inaction.

Bob24

Piriz wrote: »

The Central Bank of Ireland is answerable to the European Central Bank to the best of my understanding. Political pressure and public opinion don't really feature in their terms of reference on this I would imagine. The CB / Financial Regulator took its eye off the ball and is partially responsible for what happened up to the crash. I'm hopeful they will not take their eye off the ball again.

Villa05 wrote: »

While I have the same concerns as you, I believe the Central Bank is answerable to the ecb and I believe the German administration are keeping a close eye on what's happening here. So irish politicians can crawl back into the hole they came out of when it comes to changing the CB rules on mortgages

Sure I understand the CBI is accountable to the ECB and in theory is isolated from domestic influence. But in practice if public opinion was to unanomously shout against the rules and politicians were having closed doors talks with various stakeholders to weaken the rules while remaining within the ECB framework, I definitely think something could be achieved.

johnp001

Independent today:Relaxing income limit is bad solution to a bigger problem

SarahMollie

The Indo not talking up the market for once - never thought I'd see the day!

Bob24

Piece on how the largest landlord in Ireland is (openly and legally) planning to benefit from the current housing market and not expecting the government to fix the factors which restrict supply in the short to medium term: http://www.davidmcwilliams.ie/2016/04/04/taking-home-the-canadian-bacon

Villa05

SarahMollie wrote:

The Indo not talking up the market for once - never thought I'd see the day!

It's from colm Mccarthy. He is in the small common sense department of the indo

Villa05

Bob24 wrote:

Piece on how the largest landlord in Ireland is (openly and legally) planning to benefit from the current housing market and not expecting the government to fix the factors which restrict supply in the short to medium term:

It's not an accident, this was planned with our government the instigator

Bob24

Villa05 wrote: »

It's not an accident, this was planned with our government the instigator

I'm not sure I would say the takover of Irish assets at discounted prices by foreign funds was intentionally planned by the government, but yes it was certainly promoted by it as part of the "solution" to the banking crisis.

dubrov

Good news here in relation to the VAT change.

http://www.independent.ie/business/personal-finance/property-mortgages/department-of-finance-rejects-plan-to-slash-vat-on-new-homes-34583018.html

The Department of Finance has shot down Fine Gael's plan to slash VAT on new homes because it would have no impact on housing supply, the Irish Independent can reveal.
SHARE
Finance officials have also warned the proposal would cost €250m and would require additional tax hikes elsewhere in order to be implemented.

As I understand it, the department of Finance report to Michael Noonan.
Given the above, it seems strange that they would shoot down a proposal so publicly.

The cynic in me thinks this is has all been very carefully staged.
It allows FG to be seen to be trying to implement changes while in reality having no intention of doing anything.

Sleepy

I may be wrong, but €250m would build a lot of houses...

Bob24

dubrov wrote: »

Good news here in relation to the VAT change.

http://www.independent.ie/business/personal-finance/property-mortgages/department-of-finance-rejects-plan-to-slash-vat-on-new-homes-34583018.html

The Indo is on fire today! ;-)

dubrov wrote: »

The cynic in me thinks this is has all been very carefully staged.
It allows FG to be seen to be trying to implement changes while in reality having no intention of doing anything.

Either that or senior civil servants who are actually in charge and will have to manage the long term consequences of whatever decisions are made are starting to get seriously tired of political games.

But yeah you explanation seems quite plausible to me.

The_Conductor

Sleepy wrote: »

I may be wrong, but €250m would build a lot of houses...

At an average cost of around 200k- you're looking at 1,250 houses.
We need a constant supply of >20,000 houses per annum.
The 1,250 would be a good starting point- however, its not even 3 weeks supply- wholly ignoring the pre-existing pent-up demand (various commentators are suggesting that demand could be over 100,000 units..........)

Sleepy

Oh, I agree but my question would be:

Would a VAT reduction result in an extra 1,250 units?

stevedublin

Sleepy wrote: »

Oh, I agree but my question would be:

Would a VAT reduction result in an extra 1,250 units?

Probably, given the pent-up demand that exists.
The government would also make money on the extra builds since the VAT rate is not being reduced to 0%